Payday Loans Debt Consolidation

Laws Regarding Payday Loan Debt In Bankruptcy

There are certain laws to regulate how payday loan debt in bankruptcy should be treated. If you are filing a bankruptcy petition and are not sure whether the payday debt is also dischargeable, you must consult an expert bankruptcy attorney – someone also specializes in the payday loan laws applicable in your state. Here, it is important for you to keep in mind that the laws may vary significantly depending upon the state you are filing the petition in. Following is a brief overview on some of the important aspects associated with this issue.

Eligibility Requirements For Payday Debt Discharge

Many people have the misconception that payday loan debt in bankruptcy just cannot be discharged because it is not a conventional loan. Though it may be true in some states, but in many other states, things can be in your favor. Therefore, awareness about the state laws regarding this issue is very important. Your decision must be based on facts, not on false assumptions. In most states, even payday debts are dischargeable as per the bankruptcy laws. Even though payday loan programs arte often termed as cash advances, they are still structured as loans and are treated as any other unsecured loan.

Criminal Charges

Many people hesitate to include payday loan debt in bankruptcy because they fear that the lenders may file criminal charges against them on the basis of bad checks (bounced checks), but it is very important for you to keep in mind that most states prohibit lenders from taking any such action. Nonpayment of payday debt is not considered as a criminal offence. Since the check is issued as part of the structure of loan, even check bouncing in these loans does not provide any base to place criminal charges against the borrower. The lenders however have the right to file civil suits against you. Besides that, lenders also have the right to file a motion and challenge your request to get the payday debt discharged as part of the bankruptcy process.

Check Cashing

If you have included certain payday loan debt in bankruptcy where some check cashing agencies are the lenders, there are specific laws to deal with that situation. For example, if you have borrowed a cash advance from a check cashing agency and have now filed bankruptcy, the check cashing agency still has the right to send that check for collection. But even in this situation, the payday debts are dischargeable.

As you can see, things can be a little complicated when it comes to including payday loan debt in bankruptcy, it is always wise to have an expert legal representation for your case to make sure your rights and interests are well protected.

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